Your company is an operating company or an investment holding company. It has retained profits or surplus cash that is not paid to you, since you do not need the income. Your corporation invests the cash in GICs or other taxable investments, which you earmark for your heirs or favourite charity. You want a financial planning strategy that will increase the funds available when you die.

An option to consider – the Corporate Estate Bond®

This financial planning strategy requires your corporation to use its surplus cash to purchase a life insurance policy. By replacing the taxable investments with a life insurance policy, you will increase the

funds available to your heirs when you die, reduce the

The corporation deposits funds into the policy in excess of what is needed to pay the policy charges, creating cash value. This cash value accumulates on a tax-deferred basis, increasing the death benefit payable under the policy. When you die, your corporation receives the proceeds of the policy, tax free. The corporation receives a credit to its capital

dividend account for the amount of the life insurance proceeds, less the insurance policy’s adjusted cost basis. Dividends can then be paid – tax free – to your estate out of the capital dividend account.

Life Insurance Corporation Heirs

amount of current and future tax your corporation pays, and create a mechanism to move funds out of your corporation tax free when you die.

Death Benefit

Dividends

How does the Corporate Estate Bond® work?

Your corporation purchases a life insurance policy on your life and is the beneficiary of the policy.

By taking advantage of the Corporate Estate Bond®, you have moved corporate investment dollars from a tax-exposed environment to a tax-sheltered environment, increasing the amount you give to your heirs or favourite charity when you die.

Corporate Estate Bond is offered through Manulife Financial (The Manufacturers Life Insurance Company). Manulife, Manulife Insurance, the Block Design, the Four Cube Design, and Strong Reliable Trustworthy Forward-thinking are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under licence.